By: David S. Gallacher
2011 was a banner year for U.S. export control laws. The Obama administration has vowed to streamline and reform the bloated U.S. export control system – promising to build "higher walls" around a narrower universe of goods and technologies requiring export licenses. Following is a summary of ten of the key reforms to U.S. export laws that took place (or were proposed) in 2011.
By: David S. Gallacher
By: Curt Dombek & Reid Whitten
On November 7, 2011, the U.S. State Department published a proposed rule amending the International Traffic in Arms Regulations (“ITAR”) by narrowing the categories of aircraft and related equipment controlled on the United States Munitions List (“USML”). Concurrently, the U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) published a proposed rule adding five new Export Control Classification Numbers (“ECCNs”) to the Commerce Control List, which lists items controlled under the Export Administration Regulations (“EAR”). The two rules are linked, as the new ECCNs in BIS's proposed rule will cover those items carved out of the ambit of ITAR controls by the State Department’s proposed rule.
Prison Time and Export Controls: University Professor's Case Illustrates Dangers of Ignoring Export Compliance
By Thaddeus McBride & Reid Whitten
On Monday, October 3, the U.S. Supreme Court declined to hear the appeal of retired University of Tennessee professor John Reece Roth. In July 2009, Roth received a four year prison sentence for illegally exporting military technology, in large part due to his work with graduate students from Iran and China. Professor Roth’s conviction and prison sentence forcefully remind the research community, commercial as well as academic, of the potentially severe consequences that may arise from ignoring technology export controls.
By Curt Dombek, Thad McBride and Mark Jensen
In a significant step in the reform of U.S. export controls, the Department of Commerce issued a proposed rule on Friday, July 15, 2011, that would fundamentally affect the overlap between, and operation of, the International Traffic in Arms Regulations (“ITAR”) administered by the U.S. Department of State, Directorate of Defense Trade Controls, and the Export Administration Regulations (“EAR”) administered by the Department of Commerce, Bureau of Industry and Security. See Proposed Revisions to the Export Administration Regulations (EAR): Control of Items the President Determines No Longer Warrant Control Under the United States Munitions List, 76 Fed. Reg. 41,958 (July 15, 2011) (amending 15 C.F.R. Pts. 730, 732, 734, 738, 740, 742, 743, 744, 746, 748, 756, 762 ,770, 772 and 774). The changes, which are based on the interagency review of the U.S. export control system that was initiated by President Obama in August 2009, would create a regulatory construct for harmonizing the United States Munitions List (“USML”) of the ITAR and the Commerce Control List (“CCL”) of the EAR, as well as standardizing certain key definitions between the two regulatory systems.
By Thaddeus McBride, Mark L. Jensen and Corey Phelps
Beginning on February 20, 2011, the U.S. Bureau of Citizenship and Immigration Services (“CIS”) assumed a role in the U.S. Government's increasing regulation of technology exports. The new role for CIS relates to the transfer of controlled technology or source code, sometimes referred to as “deemed exports," to non-U.S. nationals.
New ITAR Rule on Transfer of Defense Articles to Dual and Third-Country Nationals Creates Substantial New Compliance Obligations
By John M. Hynes
On May 16, 2011, the Department of State (“Department”) published its final rule in the Federal Register amending provisions of the International Traffic in Arms Regulations (“ITAR”) regarding the transfer of ITAR controlled defense articles (including technical data) to dual and third-country nationals employed by approved foreign end-users. See 76 Fed. Reg. 28174-78 (amending 22 C.F.R. pts. 120, 124 and 126).
By John M. Hynes
On April 13, 2011, the Department of State (the “Department”) issued proposed amendments to various sections of the International Traffic in Arms Regulations (“ITAR”) regarding the definition of “defense service.” See International Traffic in Arms Regulations: Defense Services, 76 Fed. Reg. 20590-93 (amending 22 C.F.R. Parts 120 and 124).
By Curtis M. Dombek
On March 15, 2011, the State Department Directorate of Defense Trade Controls published a proposed new rule that marks a significant change in the approach to ITAR regulation. Historically, ITAR controls have always applied to commercial end products incorporating any ITAR controlled components. This was the basis of the highly publicized QRS chip case, in which the State Department asserted continuing ITAR control over avionics chips that had originated on a military program but had come to be widely used in civilian jet aircraft. That case resulted eventually in a special exception to allow jet aircraft to remain in production and passenger service with the QRS chip and without ITAR licensing.
In comments released on March 12, 2010, the Administration announced that it will be shifting the current encryption review request process under 15 C.F.R. section 740.17 to an on-line system, with the objective of reducing review times from 30-60 days to 30 minutes. While industry will welcome the shortening of the review waiting period, the current regulations already allow many encryption exports to our largest trading partners, those listed in Part 740, Supplement 3, as well as exports to other countries of items described in section 740.17(b)(1)(ii), to occur during the waiting period. There is no indication that the change would add countries like China or India to Supplement 3. As described, it also would not alter the technical definition of encryption products requiring review or result in any expansion of the existing exception for "ancillary cryptography." Without more fundamental changes along these lines, the ultimate impact of the review request change will probably be minimal.